1. Andrew Rude Office of Scientific and Technical Affairs Foreign Agricultural Service US Department of Agriculture October 25, 2007 Peanut Genomics and Biotechnology Workshop Atlanta, GA andrew.rude@usda.gov Impact of Biotechnology on Markets & International Trade

4. Global Agricultural Biotechnology Soybeans: 57%of global area Soybeans: 57%of global area Maize: 25% of global area Maize: 25% of global area Cotton: 13% of global area Cotton: 13% of global area Canola: 5% of global area Canola: 5% of global area  Biotech production on 4 main crops:  Two Main traits: agronomic  Herbicide Tolerance  Insect Resistance

5. Production of Biotech Crops Increased Rapidly in the U.S.

6. Area of U.S. Biotech Crops Crops Biotech Share (%) of U.S. Corn, Soy, & Cotton 2002 20032004200520062007 Corn 34 4045526173 Soybeans 75 8185878991 Cotton 71 7376798387 * USDA/NASS June 2007

7. Biotechnology policies often have their origin in consumer opinion and NGO pressure. Scientific/legal arguments alone may not be effective.  Consumer perception important Critical Factors for Marketing Biotech Crops

8. Critical Factors for Marketing Biotech Crops: Regulatory Systems Functioning Regulatory System Functioning Regulatory System Allows for the development, commercialization and trade of biotech crops Allows for the development, commercialization and trade of biotech crops Politically-motivated Politically-motivated Inhibit development, application and commercialization of the technology and trade in biotech crops Inhibit development, application and commercialization of the technology and trade in biotech crops

9. Critical Factors for Marketing Biotech Crops: Approvals and Commercialization Domestic & International Approval Domestic & International Approval Asynchronous Approvals Asynchronous Approvals Each step in approval process very expensive  Focus of biotech production on major commodities  “Orphan Crops”  Is peanut production large enough to attract sufficient support to go through approval process?

10. Sub-Treaty under the Convention on Biological Diversity Objective: Contribute to the safe transfer, handling, and use of LMOs that cross international borders and that may have adverse effects on biodiversity. Trade Concerns vs. Environmental Concerns Trade Concerns vs. Environmental Concerns Critical Factors for Marketing Biotech Crops: International Organizations Cartagena Protocol

11. Very few exporting countries are Parties Environmental ministries - no consultation with agricultural or trade officials Trade and agricultural interests carry little weight in Protocol discussions. Main Concerns of Industry: Documentation Requirements Liability and Redress Compliance Cartagena Protocol on Biosafety

12. Critical Factors for Marketing Biotech Crops: Traceability and Labeling Requirements Many countries adopting T&L rules (but enforcement varies).  EU: requires tracing and labeling of all biotech crops and food ingredients derived from those crops.  Based on “consumer right to know” Impacts: Impacts: Product Reformulation Market loss Skewed consumer perception Increased producer costs Increased Demands on Regulatory Systems Codex CCFL labeling initiative still gridlocked.

13. Critical Factors for Marketing Biotech Crops: Public Perception “Image is everything.” Andre Agassi

15. Food Processor Fear of Consumer Reaction and Fear of “Frankenfood” Label Actual or perceived consumer reaction Actual or perceived consumer reaction Shapes regulatory frameworks - politicized Shapes regulatory frameworks - politicized EU EU Fear of consumer reaction has curtailed biotechnology development and application Fear of consumer reaction has curtailed biotechnology development and application Bt Potato Bt Potato RR Wheat RR Wheat Liberty Link Rice Liberty Link Rice

16. Status of Peanut Production and Trade No commercialized biotech peanuts No commercialized biotech peanuts Status of biotech regulatory systems vary widely in major peanut producing countries Status of biotech regulatory systems vary widely in major peanut producing countries China, India, United States – established regulatory systems China, India, United States – established regulatory systems Burma, Nigeria, Sudan, Indonesia – no/not well developed regulatory systems Burma, Nigeria, Sudan, Indonesia – no/not well developed regulatory systems

17. Status of Peanut Production and Trade Major Peanut Exporting Countries (China, Argentina, United States, India, Vietnam) Major Peanut Exporting Countries (China, Argentina, United States, India, Vietnam) Developed biotech regulatory systems (or activity working toward them) Developed biotech regulatory systems (or activity working toward them) China, Argentina, United States and India produce biotech crops China, Argentina, United States and India produce biotech crops

18. Status of Peanut Production and Trade Acceptance of peanuts derived from biotechnology by consumers, food processors and importers difficult to predict Acceptance of peanuts derived from biotechnology by consumers, food processors and importers difficult to predict Hesitancy among consumers and food processors to protect image and brand name especially for “high end” products and higher income markets Hesitancy among consumers and food processors to protect image and brand name especially for “high end” products and higher income markets Bulk users may be more accepting where price more of an issue Bulk users may be more accepting where price more of an issue

19. Factors Supporting Development and Commercialization of Biotech Peanuts Now 22 Countries Producing Biotech Crops Now 22 Countries Producing Biotech Crops No longer U.S. vs EU No longer U.S. vs EU Multi-lateral discussion Multi-lateral discussion More countries have a vested interest in developing and commercializing biotech crops More countries have a vested interest in developing and commercializing biotech crops

20. Factors Supporting Development and Commercialization of Biotech Peanuts Biotech crops pervasive internationally Biotech crops pervasive internationally Biotech ingredients already in some 75% of food products in U.S. grocery stores Biotech ingredients already in some 75% of food products in U.S. grocery stores  Over 11 years experience with biotech crops  No longer a new technology  Not a single reported negative health impact  Public perception may be changing

21. Factors Supporting Development and Commercialization of Biotech Peanuts Research on products that have direct consumer and quality attributes Research on products that have direct consumer and quality attributes Reduced aflatoxin Reduced aflatoxin Reduced allergenicity Reduced allergenicity Increased consumer demand for the technology Increased consumer demand for the technology To date – Push of biotech, little public Demand To date – Push of biotech, little public Demand Need for improved productivity to meet increased demands brought about by population growth and biofuels Need for improved productivity to meet increased demands brought about by population growth and biofuels Consumer attributes Consumer attributes

22. Factors Supporting Development and Commercialization of Biotech Peanuts Peanut industry may wish to study rollout efforts of other agricultural biotech products Peanut industry may wish to study rollout efforts of other agricultural biotech products Long-term/multi-year effort Long-term/multi-year effort

23. Thank you Andrew Rude Office of Scientific and Technical Affairs New Technologies and Production Methods Division Foreign Agricultural Service US Department of Agriculture andrew.rude@usda.gov